Non Profit incorporation - RCCanada - Canada Radio Controlled Hobby Forum
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Old 09-14-2010, 08:15 PM   #1
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Non Profit incorporation

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We had a really heat meeting this evening in regards to the Clubs non profit incorporation. The issue at hand is there is some thought that a member of the club is in contradiction to the clubs non profit status for designing and building some electric planes and then in turn offering these built planes for sale to members. There is some feeling that because we are a non profit club that all members if they sell something to someone else should be doing so for no profit. Any input from the RCCanada community is welcomed.
It is my position that the clubs non profit status has nothing to do with a member and what he does to fund his hobby.
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Old 09-14-2010, 08:33 PM   #2
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Re: Non Profit incorporation

IMO the club is non-profit, not the members. As long as they aren't using club facilities (e.g. giving private, paid lessons at the flight line), why would the club care?
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Old 09-14-2010, 08:35 PM   #3
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Re: Non Profit incorporation

Its a load of crap. If you want to buy something I am selling then don't expect me to take a loss because we are a not for profit club.

I purchased of of the planes in question and I don't remember any kind of sales tactic's. These planes sell themselves so everything is low key. I could see it being an issue if the member was actually advertising his product at the field.
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Old 09-14-2010, 08:37 PM   #4
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Smile Re: Non Profit incorporation

Our club is inc.. One of members owned a Hobby Shop. Also the same designed and manufactured kits
Two seperate issues.
I believe it has no bearing on members.
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Old 09-14-2010, 08:38 PM   #5
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Re: Non Profit incorporation

The member's actions are irrelevant to the club's NFP status.

Beyond that... not for profit status is based on what the organisation does with operational surpluses. Profit is defined as as returning dividends to the shareholders.

Look at a typical Fun Fly as an example. The club will host the event and charge landing fees and/or spectator admission fees/parking fees and at the end of the day the club sees a budget surplus. (they bring in more than they spend.) This is OK as long as the surpluses are held in general revenue and there isn't a payout to the members at the end of the year (or event.)

Back to the example: Even if the club produced, marketed and sold a kit and made money on it, it would still be considered a not for profit as long as the revenue were kept in the club's coffers.

The area that MIGHT get sketchy is if test flying and developing the models would be considered recreational flying (and covered by MAAC insurance) or commercial flying.
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Old 09-14-2010, 08:38 PM   #6
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Re: Non Profit incorporation

If it is the 'Clubs' merchandise in question, then there may be a point..... but if not, then it doesn't really come into play. Either way, a NFPO just means that there is NO PROFIT showing at the end of FYE. Doesn't mean that the club can't make money on selling goods/services to pay for other things. Field maintenance, FF events, Signage, Advertising, etc.

NFP doesn't apply to every transaction made, but to the collective management of the organization.

Everyones 'opinion' will be different, but if a member is selling his/her own goods, be it for gains or losses, it is no business of the club.

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Old 09-14-2010, 08:39 PM   #7
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Re: Non Profit incorporation

Nuker is correct.

That is the premise that we have been working under for years.

You can take it one step further - if the club hosts an event like a fun fly, charges admission and sells food, you can turn a small profit that aids in the running of the club (rent and upkeep) and still be 'Non Profit'.

All of the BIG Charities do it (United Way etc) so why not you?

The key is not to have a BIG Profit and pay salaries to the Executive etc.
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Old 09-14-2010, 08:42 PM   #8
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Re: Non Profit incorporation

Have to agree with the others. As long as the club itself is not seeing a profit then there is no issue. No one owns the club right? Are the president or other directors getting a cut of the sales? What one member does on his own time and in his own house to make money has nothing to do with the club itself.
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Old 09-14-2010, 08:43 PM   #9
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Re: Non Profit incorporation

* I am not a lawyer. The following is not legal advice. For legal advice please consult a licensed lawyer in your jurisdiction. *

In my opinion, the actions of the club (a non-profit) are distinct from the actions of the individual (per the Solomon v. Solomon principle of separate corporate identity). Assuming he is not acting on behalf of the incorporated person, or holding himself out to be doing so, he can do whatever he wants as long as he isn't misrepresenting his actions to be that of the club to a 3rd party. It is analogous to someone who works at one of the big distributors joining your club and the club stating that they cannot distribute hobby related products because the club is a not-for-profit. Makes no sense; they are distinct entities.

Last edited by Spitfire_mk5; 09-14-2010 at 09:08 PM.
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Old 09-14-2010, 08:46 PM   #10
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Re: Non Profit incorporation

It's kind of funny how long it took to actually get the membership to read and then ratify the constitution and now less than a year later someone has interpreted it in a strange way that no one had ever imagined.

I would have liked to attend this meeting to hear why this was considered a problem.
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